Trial court misused discretion by failing to provide adequate reasoning for its decision to exclude law practice debt from its valuation of the practice.
Generally, value of interest in professional partnership is consequences of withdrawing, such as a buy-out agreement. Here, where there was no agreement, court must consider the accounts receivable.
Court must make findings of need, ability, and that total fee is reasonable.
Court affirms valuation by wife’s expert that husband’s interest had goodwill value in excess of value in partnership agreement. Wife’s expert used the excess earnings method.
Partnership agreement governs valuation of divorcing attorney’s interest in law firm.
No property to consider tax consequences of sale of law practice where husband has no plans to sell his interest for “at least another 15 to 17 years.”
Contingent fee interest in worker’s compensation claim is not marital property. At best, husband had a potential for earning income in the future.
Interest in law firm does not include goodwill as valuation is too speculative.
Goodwill of solo law practice is too speculative – more equitable to consider earning power and set alimony.
Death benefit provision of partnership agreement is properly used to calculate the value of interest in law firm for distribution purposes.
Value of law practice includes enhanced earning capacity. Professional degree or license merges with the professional practice itself where the practice has been ongoing for a number of years during the marriage.
Interest in law partnership is governed by terms of the partnership agreement – capital account as of date of separation.
No professional goodwill in P.I. practice.
Maryland adopts minority view and holds that the goodwill of a solo law practice is not includable in the marital estate upon divorce. The goodwill is personal to the attorney and is not severable from his or her reputation.
Trial court properly rejected valuation by buy/sell agreement and accepted valuation of wife’s expert who averaged net-asset-value and excess-earnings methods.
An attorney’s contingent fee contracts are not marital property subject to division, due to their speculative and intangible nature. The fees earned by an attorney should be considered for purposes of support. Also, an attorney’s professional goodwill is not a divisible marital asset.
The contingent fees a lawyer hoped to earn in cases pending at the time of his divorce are not divisible marital assets or assets of the law practice. (Distinguishes Weiss).
Contingency fees from husband’s law practice are not marital assets as they are too remote, speculative and uncertain.
Valuation of husband’s interest in contingency fee cases affirmed as there was an adequate basis for the valuation.
Law firm partnership agreement controls and trial court reversed for assigning value to professional goodwill.